In one of the largest health-related bankruptcies to date, Envision Healthcare Corp has filed for Chapter 11 bankruptcy and is expected to begin layoffs this summer.
The private equity–backed multispecialty physician staffing firm has agreed to restructure 60% of its $7.7 billion in debt obligations, according to a company press release issued May 15.
Last year, Envision clinicians handled nearly 30 million patient encounters. The Nashville-based company employs more than 21,000 clinicians mostly in emergency and hospitalist medicine, anesthesiology, and neonatology. Another 500 of its physicians practice in radiology, according to Envision's 2022 Clinical Impact Report. The company filed its voluntary petitions in the US Bankruptcy Court for the Southern District of Texas.
The bankruptcy filing comes amid several challenges that the company has wrestled with in recent years. Prolonged legal battles with health insurer UnitedHealthcare over payment to clinicians caused Envision to lose its in-network status in 2021.
In addition, according to the press release, since the 2018 acquisition by KKR & Co, Inc, Envision has faced a pandemic-driven decline in patient volumes, a national clinician shortage, rising inflation, and financial losses because of federal legislation curtailing surprise billing. The company, along with other private equity–backed health staffing firms, has been criticized for aggressive balance billing. (Disclosure: KKR acquired Internet Brands, the owner of WebMD/Medscape, in 2014.)
The Next Chapter
Envision said that it has entered into a restructuring agreement with its stakeholders and plans to sustain clinical operations without interruption, according to the press release.
Under the agreement, Envision's doctor practice and its Amsurge ambulatory surgery unit will be separately owned.
"Envision's teams play a critical role in the functioning of the U.S. healthcare system," CEO Jim Rechtin said in the company's statement. "We are grateful to the Envision clinicians, physician partners, and clinical support teammates for their continued commitment to caring for patients when they need it most."
Litigation, Layoffs Pending
Though Envision has announced plans to continue operations in the wake of the bankruptcy filing, a variety of challenges persist. The company plans layoffs of 329 employees, according to Worker Adjustment and Retraining Notification notices filed in Pennsylvania and New York. Envision said that it will help affected workers by identifying open positions within the company, hosting job webinars for open positions, and providing outplacement services.
In addition, the American Academy of Emergency Medicine plans to forge ahead with its lawsuit against Envision, according to a report in KFF Health News . The group contends that the company's alleged use of shell business structures to retain de facto ownership of emergency room staffing groups is illegal. The Academy hopes a legal victory would lead to a ban on the business strategy across California in emergency departments operated by Envision as well as other companies.
John McCormack is a Riverside, IL–based freelance writer covering healthcare information technology, policy, and clinical care issues.
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Cite this: Envision Healthcare Files for Chapter 11 Bankruptcy, Separately Plans Layoffs - Medscape - May 22, 2023.